Commonwealth Bank of Australia (CBA), through its venture-scaling entity x15ventures, has today announced a minority investment in rent-to-own startup, OwnHome. x15 has joined strategic partner, SquarePeg, in OwnHome's Series A fundraising round, which will be used to fuel the company's growth.
As the house price to disposable income ratio continues to climb, it is becoming harder than ever for first-home buyers to save a deposit. OwnHome provides an alternative path to home ownership for aspiring buyers who can afford regular mortgage repayments but are looking to overcome the deposit hurdle, particularly those with no access to parental financial support.
Approved, credit-worthy customers can move into their own home without the need for a deposit by paying an upfront fee and making monthly payments that build their deposit over time. After three to seven years, customers have the option to buy their home at a pre-agreed price and put the accrued deposit toward their purchase.
OwnHome joins a growing portfolio of ventures at x15 that complement and expand on CBA's core home buying business. These include free credit score provider, Credit Savvy, conveyancing platform, Home-In, property management company, :Different, and a soon-to- launch digital home loan proposition, Unloan.
OwnHome was already known to x15 as the winner of Xccelerate2020, an event that gives early-stage founders access to mentors to help them accelerate the growth of their businesses. As 2020 winners, OwnHome Co-founders James Bowe and Tim Harley secured $150,000 in funding.
Toby Norton-Smith, Managing Director of x15, said: "Housing affordability is a challenge for many Australians, particularly young people and their families. We believe OwnHome will provide an alternative path to home ownership, particularly for first home buyers who are responsible savers but aren't able to rely on the bank of mum and dad for help with the deposit.
"This is a particularly satisfying investment to make, given we've worked with the OwnHome team since they first founded and launched with the support of our Xccelerate program, and because our strategic VC partner SquarePeg is leading the round."
Angus Sullivan, CBA's Group Executive Retail Banking Services, said: "OwnHome is helping to address one of the biggest challenges currently facing first-time home buyers, which is finding new ways to save and put down a deposit on their cherished property.
"As Australia's largest lender to first homebuyers, innovating and improving the home buying journey is the cornerstone of what we are doing to help our customers and today's investment in OwnHome will provide greater choice to those who dream of home ownership but seek a different route to the traditional rent-and-save approach. This is in addition to our support for thousands of first homebuyers via the Government's Home Guarantee Schemes."
With more than 3,500 applicants already on its waitlist, OwnHome plans to buy 200 homes for approved customers over the next two years.
OwnHome Co-founder, James Bowe said: "In just over a year, we've continued to grow our team and customer base, partnered with :Different, and have recently expanded into the Queensland property market. Xccelerate2020 helped set us up for success in the early days of OwnHome, providing us with the funds and expertise to take us from a small team to a growing alternative for those eager to secure their path to home ownership today.
"As we scale and shape the model in Australia we will continue to benefit significantly from the support of like-minded partners in CBA and x15, who share our mission to help more people on the road to home ownership."
Previously, Bowe worked in the San Francisco office of Bain & Co, while Harley was the Head of Middle East for TransferWise and at Macquarie Capital before that.
The investment in OwnHome complements CBA's involvement in the Australian Government's First Home Loan Deposit Scheme, which has so far helped thousands of customers buy their first property. On Monday, CBA announced customers would be able to apply for additional guarantee places under the scheme.
